BG, the fast-growing oil and gas exploration company, dismissed predictions of a "global gas glut" as the group raised its production targets, sending shares to an all time high.

Chief executive Frank Chapman said that the International Energy Agency was "on its own" in its "conservative views" after it predicted in November that a surge in "unconventional" gas production such as from shale this decade would lead to lower prices and unused pipeline and liquid gas transportation capacity.

BG said that world gas demand would increase by a third over the next, with more than half this increase coming from non-OECD countries. The company said to meet demand in 2020, investment of $2tn (£1.2tn) would be needed in new production equivalent to 20 times the gas produced by Norway.

"I fail to see where this [glut] is going to come from. In order to meet growing demand … it's a heck of a challenge. There seems to be a view that the world is awash with gas and it's free. But shale gas is in a very tight rocks. These are complex wells. You need to balance this with the rhetoric that there is lots of it and it's free."

He also rejected the view that higher gas supplies – and the creation of a global market with liquefied natural gas tankers shipping around the world – would depress prices.

Most gas prices would continue to be indexed to oil prices, he said, to reflect the higher costs of unconventional production such as shale gas. "The idea that you can enjoy Henry Hub [the price set for gas futures contracts in New York] prices for gas going to Yokohama [a major LNG port in Japan]...by the time it get there it's oil indexed."

The company reported a bigger than expected 9% increase in operating profit for the year to $17.4bn on the back of higher oil and gas prices. It also said that it expected to beat its previous long term target of 6-8% annual production growth from next year on the back of higher than forecast production from US shale gas, Brazil's deepwater pre-salt fields and coal bed methane in Australia. It also said that last year it had added 1.7bn barrels of oil and gas equivalent to its reserve base, which now totals 16.2bn. The growth figures dwarf those of oil majors that are struggling to find new reserves.

BG raised its estimated daily production from Brazil by 2020 from 400,000 barrels of oil and gas to more than 550,000. It also said it expected to be producing daily 190,000 barrels equivalent of US shale gas by 2015, against its previous target of 100,000. Chapman added that 70% of its profits by 2015 would be generated by oil-related sales as opposed to 50% last year.